The Act 47 Coordinators for Harrisburg just held the only two (2) informal public meetings scheduled as part of the Act 47 process. The reviews are mixed at best. The chance for real input by citizens was limited, so now DWH wants your input on any Plans for our future. But first, a short review.

The first Act 47 event was at the YWCA on February 28. It was scheduled for two (2) hours. The room was full. People were given three (3) minutes to ask their questions and make their points. After about 20 people approached the mic, some follow-up comments occurred.

Many in the crowd were aware of various parts of our problem and quickly recognized a few errors in the presentation. The most notable mistake was what seemed to be listing Dauphin County as a guarantor of 100% of the Incinerator debt. That’s roughly a $150 million mistake. The error did not instill confidence.

Numerous residents voiced serious concerns for the future, made suggestions on cutting expenses and uniformly demanded accountability. Some just vented. The frustration swelled as the evening progressed, but it ended on time.

The second event occurred March 7 at the Heinz-Menaker Senior Center. The room was full, with many returning participants for this 2-hour session.

The frustration on the second night was evident on both sides of the microphone. A question remains for a skeptical public about why we were there. Were the Coordinators just going through the motions to “include” residents by recording a few comments and ideas to be cited in their report OR will the input of residents actually impact the direction or details of any Plan? We shall see.

It was plain the Coordinators’ viewpoint includes assumptions not accepted by all. For instance, they insist that money owed on the General Obligation debt of Harrisburg cannot be changed AND that a primary concern of a Plan must be to “satisfy creditors” — whatever that means. People were visibly unhappy with parts of the exchange. We urge everyone to recognize, however, that the ugly financial facts can’t help but lead to hard, painful discussions and choices.

A disappointment for many in the room was that the Act 47 Team made clear that they view their role as limited. They will not identify or assign blame or seek to hold anyone responsible or accountable for this debacle. They cannot investigate or address portions of the public debt, such as the School District.

The Team was very clear about what they seek to do. They will present a Plan to (1) reduce expenses (but not debt?), (2) add revenues and (3) address debt, i.e., satisfy creditors. Under that limited preconceived formula, it now appears obvious that most likely they will be recommending the sale of our public assets to the private sector, allowing a few to reap significant profits off the backs of taxpayers and ratepayers.

So now what? Now it’s your turn. DWH will be seeking to meet with the Act 47 Team to get and give information, ideas and more. So here’s your chance. Let us know your thoughts, concerns, ideas, plans and strategies. Talk with your neighbors, co-workers and family. Let us know what you think can and cannot happen in a Plan for Harrisburg. Let us know what you think taxpayers should and should not tolerate. Email us at debtwatchhbg@gmail.com.

Please let us know your thoughts and ideas. We’re entering rough waters now. We all have to be pulling oars together to turn this ship back from those rapids that lay ahead. So please help. Some of us can’t swim.

There are now at least 7 different lawsuits pending against the City over Incinerator debt. The Harrisburg Authority is a co-defendant in at least 5 of those cases. THA also has a few separate cases still pending and many unpaid vendors.

The Dauphin County Commissioners appear to be determined to keep pushing for judgments against the City. The County has brought 4 of these lawsuits and reports state that they are helping to pay (with our money) for some of the other cases.

Hearings on demands for Court Orders requiring the City to turn over ALL HBG TAX REVENUESare approaching. One was set for this coming week, but has been postponed as the City’s new legal counsel gets up to speed. Another hearing is now scheduled in a different case with a different Judge for March 15 and 17.

Word is DCED filed formal motions this past week to Intervene in the 2 largest cases. We do not know what impact that will have on the cases.

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NO CONCESSIONS

The Bondholders, their insurance company (AGM) and their attorneys have made NO KNOWN Concessions to date. They still want every dime. If that happens without any changes in existing state or federal laws, everyone in all of Central Pennsylvania will suffer the consequences for years to come.

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ACCOUNTABILITY

Zero. None to date. However, a forensic audit of Incinerator issues has begun at THA.

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VALUE OF INCINERATOR

Zero. Zero. ZERO!! That is the Fair Market Value. While reports claim that the Incinerator is now running at a profit, those claims DON’T COUNT the cost of debt payments. This year that DEBT SERVICE PAYMENT is estimated to be more than double the projected revenues!!

Perhaps worse, the cost to rebuild the facility – the replacement cost – is estimated to be almost $100 million LESS than the principal owed on the debt. That’s like having a $60K loan on a new $40K car. It’s going to wear out long before the debt is paid.

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NEW YORK LEGAL HELP

Cravath, Swaine & Moore are trying to help, with free legal services to City Council and bringing in free world class Financial Advisors to help them. Their report may be issued within a month to theirclient – City Council, but it is not known if it will be a privileged legal opinion or a public document. We will have to wait and see.

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HOW TAXPAYERS ARE BEING PLAYED

A twofold scenario keeps popping up at a possible solution. (1) Lease of garages and meters (Gross $200+ million – NET $100 million) and (2) Sale of the Incinerator (Gross $100+ million). It would mean one thing. TAXPAYERS will bear the entire burden of this fiasco – and NOT the bankers, lawyers, appraisers, engineers, financial advisors, public officials, lobbyists or former officials who brewed this toxic stew. Our public assets will be transferred in full to pay everything, and it will still not relieve us of the whole debt. We will lose future revenue streams, so taxes must go up dramatically and, at the same time, the cost to park and get trash picked up will skyrocket. Chicagodid the garage deal (paid huge fees) – much bigger than our system – just a few years ago. Today, they too are functionally bankrupt. NO MATTER HOW IT’S PACKAGED, this 2-part option will fall on taxpayers alone and let everyone else off the hook.

REMEMBER,Without accountability, there can be no solution.

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CHAPTER 9 BANKRUPTCY

More than ever, it looks inevitable, though some hope still looms.

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WHAT’S NEXT?

Get ready to fight the fight. Over the next few months, Courts will start to issue orders to City officials, recommendations will be made by the people the State hired, bankruptcy counsel will issue recommendations and low bidders will try to take our assets for a song. Be ready. We may need you in a courtroom. We may need you at public hearings. We may need you to be heard outside private meetings. We may need you to speak to your state legislatures. We may just need you to show up to make sure that public officials hear, consult and adhere to the collective will of their TAXPAYERS.

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MEMBERSHIP

We have more than 130 members now. We need everybody. Why? We, the taxpayers need to lead ourselves out of this mess. We need a strong united voice, so Judges, Elected Officials, Bondholders and State Officials all hear us. Sign up new members today. Go to debtwatchharrisburg.com. Join us!

3) As suspected, the timing of the Act 47 designation seems related to the 12-16-2012 Lahrs vs. the City of Harrisburg. The City moved to dismiss or stay the case on 12-15-2010, arguing DCED is now “an indispensable party” to the case. The trial did not start on 12-16-2010 and was continued until January 21. The Judge was reviewing the issue, but it’s not clear yet if he will push back the trial further or make a quick ruling so trial can proceed.

1) After a second night of testimony, the Act 47 Hearing closed on Wednesday, November 17th. The transcripts of testimony are done and forwarded to the parties. Parties who wish to submit proposed findings, conclusions, and written arguments must do so by 12/8. DWH will post the rest of the documents in from the hearings as soon as we can get them scanned.

2) The first trial on claims against the City has been scheduled to start on 12/15 in Dauphin County Court. Joseph & Jacalyn Lahr have filed an equity suit against the City demanding that all monies paid by Dauphin County as guarantor of the THA incinerator debt should be repaid in full to the County and other obligations. The suit also claims that the $68 million THA City-guaranteed debt should be included in the 2010 Budget. Access the Court filing here. There is Motion to Stay because of the Act 47 process which is awaiting a ruling.

3) We have no update on any of the five (5) other Incinerator-related legal claims against the City.

4) On 11/23, Harrisburg City Council voted to approve a Memorandum of Agreement securing Cravath, Swaine, & Moore to advise Council on Act 47 and Chapter 9. It is Pro Bono service, with the City responsible for certain out-of-pocket costs.

5) DWH‘s last meeting was on 11/16 @ the Midtown Scholar. Another DWH meeting will be scheduled soon with consideration of the holidays.

In the meantime, those of you who are able and willing to help out with DWH‘s mission, the upcoming Budget Hearings give that opportunity. In these meetings, the Budget & Finance Committee, Susan Brown Wilson, Chair, will listen to and discuss presentations from City departments and administrators before City Council votes on a final 2011 Budget on December 16th. See “Meetings & Notices” for the schedule for the 2011 Budget Hearings. It would be effective to have at least 2 DWH members at each hearing to participate, that is attend to observe, take notes, and provide a review for DWH‘s records.

If this is something you are interested in doing, please email debtwatchhbg@gmail.com with your plan to attend so an account of members in attendance can be kept.

Of course, as a volunteer taxpayer group, all and any assistance is greatly appreciated. It will be together that we succeed.

1.The Act 47 Hearing will resume this Wednesday, November 17, 2010, at 4:00 p.m. in the Chambers of City Council. BE THERE. Anyone who did not testify the first night will be permitted to testify. A new Presiding Officer has been appointed by DCED. He is Edward Finkelstein, an attorney with experience presiding at administrative hearings at other agencies.

After the transcripts of all testimony is provided, the parties will be permitted the opportunity to submit written proposed facts and conclusions of law for the Secretary of DCED to consider in entering his decision on the application. The full record will be certified by the hearing officer and then sent to the Secretary for a determination.

2.A members meeting of DWH will be held Tuesday, November 16 at 6:30 p.m. It will be upstairs at the Midtown Scholar Bookstore.

3. Equity/Mandamus case, Lahr v. City of Harrisburg. A Trial on claims against the City of Harrisburg that was scheduled for next week has been continued until December 15.

4. DWH submitted a response to a request from the Upper Dauphin Sentinel regarding a forthcoming article of the impact of the Debt Crisis on others in the County. We addressed what we deem to be poor choices in the use of tax monies to sustain legal fights between local governments.

5.The New York law firm of Cravath, Swaine and Moore have offered to advise City Council and the City on Chapter 9 Bankruptcy and Act 47 pro bono. The agreement is subject to formal approval, which is hopefully forthcoming.

6. The Harrisburg Authority is exploring the possibility of transferring monies form their water funds to the City to assist in their short term economic needs. There may be a vote this week. Members of DWH attended last week’s budget hearing to push THA to get a genuine forensic audit underway.

7. Assured Guaranty lawsuits against City and THA. The City filed Answers to the Complaints seeking receivership and attachment of our tax dollars. Assured Guaranty and the Banks Have filed motion seeking to effectively accelerate the appointment of a Receiver against at least the Incinerator operations, despite pending objections by THA to the Complaints.

Tuesday night’s Legislative Session of the Harrisburg City Council was likely the most significant City Council meeting since the passage of the current City Charter 40 years ago.

First, with tremendous understatement, DCED briefly introduced an Interim Coordinator they have appointed while the Act 47 hearing process continues. It brings real help — and not the Scott Balice firm — to our city government in examining and addressing how they manage this City. He is Bob O’Donnell, former speaker of the State House of Representatives and a lawyer familiar with municipal finance.

The second and most important event was City Council unanimously approving a Resolution that recommends engaging the New York law firm of Cravath, Swaine and Moore to advise on the good and the bad of pursuing Act 47 and Chapter 9. Council has 2 weeks to finalize the process of bringing them on board.

Even better, though a true national powerhouse law firm, Cravath has offered to bring their might and fierce national reputation to the aid of the taxpayers of Harrisburg PRO BONO as a public service. That’s right. No attorneys’ fees. They are one of the most respected and feared law firms in the nation, and we now have them as a great champion on our side. They should be applauded for their commitment to the legal profession and unflinching sense of public service.

The road is still long and fraught with peril, but our company on this journey is now much, much stronger.

1. In regard to Act 47 hearing, on Tuesday, a telephone conference of legal counsel occurred to review pending issues, but no formal action was taken.

2. DWH participated in the weekly meeting of Dauphin County Commissioners, essentially introducing the group to the Commissioners and voicing our concern with a litigation strategy that ultimately means that taxpayers incur the legal costs of three (3) local parts of our government – the County, the City and the Authority – fighting each other in court. We encouraged that our local governments become aligned in order to resist the actions of the banks, bondholders and insurers.

3. DWH held a public meeting to review the goals of the organization, the list of seven (7) currently pending legal proceedings related to the DEBT CRISIS, and other issues. We discussed the need for taxpayers to be protected from these proceedings, as our interests seem to have been lost in the legal proceedings.

4. Members of DWH attended the first-ever THA budget meeting on Thursday.

5. There are more THA budget meetings coming up and we encourage everyone to attend. (click: “Meetings & Notices” for dates)

6. City Council has a Legislative Session on Tuesday, 11/9 @ 6:00 p.m. We are hoping they take swift action on hiring a firm to advise the on Act 47 and Chapter 9. Please, show up and be heard.

1. We plan to have a meeting of members and other interested persons considering membership next Wednesday, November 3rd @ 7 p.m. at the Derry Street Methodist Church, 1508 Derry St. There’s a parking lot along the side of the church and the side door will be open.

2. DEBT WATCH HARRISBURG issued a Rate Proposal for Legal Fees to both City Council and the responding law firms who expressed interest in advising the City on Chapter 9 Bankruptcy and Act 47. We seek to create a governmental rate to be charged to the City that is linked to the rate formula the U.S. Government pays to private attorneys who prevail in certain cases against the government, which is currently $175.25 per hour. This is FAR below the rates most firms would charge. (See “Public Documents” to read letter).

3. We filed additional documents this week with DCED that addressed issues involving last week’s hearing and how Act 47 should be reviewed in Harrisburg’s unique situation. As of Thursday evening, we are awaiting rulings on a variety of matters. (See “Public Documents” to view the documents).

4. We appeared before The Harrisburg Authority Wednesday evening to urge them to prepare to transition the Incinerator and related “projects” back to the City, a step that should be done that will actually DECREASE the taxpayers overall liabilities here (more on that to come).

5. Dauphin County filed another lawsuit against the City and The Harrisburg Authority this week. Once again, we the taxpayers are paying for legal counsel for all sides.

6. Finally, we have tweaked our requirements a little, as we are allowing Committee people who are otherwise eligible for membership to join. These people, though elected, are party officials and not public officials. Public officials, both elected and appointed, are still ineligible for membership.

Thanks to everyone for your interest in and support of DEBT WATCH HARRISBURG.Remember, if you own real estate in the City; live in the City and have a job anywhere (pay local income taxes to HBG); or if you pay Business Privilege/Mercantile Taxes to Harrisburg, you are eligible for membership. If you’re ineligible, you can still sign up for our electronic mailing list.

It was a good first week for our new Harrisburg taxpayers’ organization.

Standing together, we collectively and effectively stated our case to the Department of Community and Economic Development (DCED) and anyone else listening. The work is far from done. I think the public servants working at DCED understand that if we oppose a position they take, we do not do so as their enemy. We are citizens simply demanding and expecting our public officials to perform their duties as public servants, keeping the rights of the people in the forefront of their mind. We simply seek integrity, fairness and competence if those who serve in these important roles of governance. Nothing more. Nothing less.

Over the weekend, various filings and communications that DEBT WATCH HARRISBURG presented to DCED will be posted on our website for public view (see “Public Documents“), as will the City’s responses. It is troubling that our City Administration would oppose the requests and demands of their own citizens and taxpayers for a more full and complete record at a Hearing on an Application that they assert was submitted on our behalf. DWH is not an enemy of the Administration. We simply disagree on some paths they have chosen, and some they’ve foregone or overlooked.

The Administration should be aware that DCED itself has very little money available to it to provide to Harrisburg, as it has 16 or so other Distressed Municipalities ahead of us in line. They plainly do not have anywhere near enough funds to legally transfer to help Harrisburg meet a full payroll, yet alone cover its projected cash-flow deficit. DCED cannot pledge the full faith and credit of the Commonwealth to back a bank loan taken by our City, so the instantaneous passage of an ACT 47 application does not provide any real leverage in the necessary short term borrowing being sought. One just does not have a financial or legal relationship to the other. For those who claim otherwise, show us the facts and the source of such claims.

Meeting a $1.2 million payroll requires roughly $25.00 per resident of Harrisburg. I urge CREDC and the Chamber to now bring their money, clout, and ingenuity to bear for the short term needs for our City to make payroll. They have publicly spoken of wanting our City to succeed; have had their members benefit from a long development boom; enjoyed the fruits of long-term tax abatements; and participated in the growth of this City. Please step forward and participate in the time of need, not as a knee jerk public relations move or political spin, but as an act of true citizenship.

On behalf of all of the members of DWH (I think we are about 40 and growing in just 7 days), I want to thank our fellow citizens for your strong support and kind words.